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Reminder: Carrying Over Annual Leave

With many companies’ holiday year running from 1 April to 31 March it is not uncommon for us to receive a flurry of enquiries every April on the legal position on carrying over annual leave. In this article we provide a timely reminder to businesses on what should be carried over and give some tips on avoiding carry over.

As a reminder, full time workers are entitled to 5.6 weeks’ annual leave throughout the course of a leave year. This 5.6 weeks is made up of 4 weeks’ leave under European Directive rights and an additional 1.6 weeks’ leave provided under our own Working Time Regulations 1998. This is important as case law has been clear for a number of years now as to what should and should not apply at a domestic level when carrying holiday over.

Sickness

By far the most common reason for workers being unable to take their annual leave is sickness absence. We already know that where a worker falls ill either during annual leave, or where prearranged statutory holiday coincides with a period of sick leave, then the leave should be rearranged. But what about scenarios where a worker has been off ill for an entire year or has been unable to take their remaining leave towards the end of the year owing to illness?

The current statutory position is that a UK worker should only be allowed to carry over the European entitlement of annual leave to the following year. In practice this means that a full time worker will be entitled to carry over 4 weeks’ leave to the following year if they have been unable to take it owing to sickness. This in turn has the effect that the worker will lose the remaining 1.6 weeks’ leave afforded to them under UK legislation, unless allowed to do so by their employer.

So what about a worker who is off for a significant period of time, perhaps spanning a number of years? Is there a limit as to when the leave must be taken? Recent case law has answered this question and stated that any EU leave not taken within 18 months from the end of the relevant leave year is likely to be lost.

It’s worth remembering that employers can give workers notice stating specific dates on which they must use their holidays. This can assist employers in situations where workers have no intention of using up their annual leave before the end of the leave year and are instead banking on carrying it over or situations where there are shut down periods (which is common in manufacturing) and employers need employees to take holiday at specific times. It should be noted however that European case law has stated that it would be contrary to European Directive for employers to force workers on sick leave to take holidays. Whilst no such case has been brought here in the UK it is likely that we would follow Europe on this point.

Reasons beyond a worker’s control

Whilst there is nothing in the Working Time Regulations that specifically permits carry over of holiday leave where, for example, a worker is unable to take their annual leave entitlement owing to work pressures, case law is developing in this area.

In Sash Windows Workshop Ltd v King, the EAT  held that where a worker was unable or unwilling to take their annual leave entitlement due to reasons ‘beyond their control’, they should be allowed to carry this allowance over to the following holiday year. The case has been appealed and we are expecting a judgment on the same in June 2017. What this case does indicate however is that Tribunals now appear to be broadening the acceptable reasons why a worker may have been prevented from taking leave and therefore be allowed to carry that leave over.

Whilst we await the Sash judgment I believe it would be risky, not to mention an employee relations disaster, for an employer to refuse to allow a worker to carry over their annual leave in such circumstances that were beyond their control, especially where a request for annual leave was rejected in the previous year owing to work requirements.  Whilst the issue of how much holiday can be carried over in such circumstances was not raised in this particular case, it is anticipated that the courts will follow previous guidance and state that only the 4 weeks’ worth of European holiday entitlement would carry over.

What should you be doing now?

Keeping track of and organising annual leave can be a headache for employers, especially during popular holiday periods such as summer or Christmas. When you add long term sick or carry over of annual leave into the mix then matters can become complicated especially for SMEs who have a limited number of staff available for cover.

Familiarising yourself with the law in this area eases the burden on businesses and stops any potential abuse of the system by workers. We will keep you updated on any new developments in this area in future blogs and instant updates through our Twitter account - @BPE_Employment

What does this mean for you or your business?

It is always advisable to tackle any long term sickness absence head on. Whilst the out of sight out of mind thought process is easy to adopt, a worker will still accrue annual leave whilst off sick, albeit at the rate of 4 weeks a year and not the 5.6 weeks under UK statute.

This article is based on the law under statute.  Employers should ensure that their contracts of employment or handbooks do not contradict any of the above guidance.  For some employers, collective agreements may have also been agreed by Unions and these should also be adhered to when considering holiday rights of workers.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.